U.S. Paints, Coatings to Top $30.6B

Industrial maintenance and marine coatings in the United States will see slow but steady growth in the wake of a five-year rebound blazed by the architectural sector, according to a new market forecast.

The U.S. paint and coatings market should top $30.6 billion by 2017, kickstarted by the architectural paint and coatings segment, according to “Paint & Coatings,” a new analysis by The Freedonia Group Inc., a Cleveland, OH-based market research firm.

Freedonia forecasts U.S. domestic demand to reach 1.5 billion gallons in 2017, up from 1.2 billion gallons in 2012.

U.S. Department of Housing and Urban Development

U.S. demand for architectural coatings is forecast to outpace all other coatings sectors, due to a "strong rebound in construction activity," particularly in the residential sector, the study says.

The market gains will be fueled by a “strong rebound in construction activity,” which will propel demand for architectural paint, as well as metal building component coatings, the report says. The skies are also reportedly brightening for automotive coatings.

“This will be a notable improvement over the volume declines recorded during the 2007-2012 period,” according to Freedonia.

The manufacturing sector will also see renewed growth during the period as rising consumer spending generates more opportunities for coatings used in production of motor vehicles and furniture, the study suggests.

“The architectural market will remain the leading outlet for paint and coatings through the forecast period, with advances anticipated to outpace those of the other major segments of the paint and coatings industry,” according to Freedonia's analysis.

The residential sector is forecast to provide the best opportunities for growth, as the country recovers from the housing crisis that slashed demand for residential architectural paint, particularly in the new housing segment, the study says.

Housing starts grew nearly 6 percent in July, to a seasonally adjusted annual rate of 869,000 units, driven by an increase in apartment construction, according to the latest Census Bureau data.

Interior vs. Exterior

According to Freedonia's study, interior architectural coatings will remain larger and grow faster than those meant for exterior applications.

Increasing environmental awareness and greater consumer concern regarding indoor air quality will spur demand for low- or no-volatile organic compound (VOC) products, especially those that are marketed as having low odor or being odor-free, the study concludes.

In exterior applications, coatings demand will continue to be cramped by the popularity of siding materials (e.g., vinyl) that do not need painting, the study suggests. However, the growing use of fiber cement siding in construction will provide some support, as this substrate—unlike vinyl—can be painted, the study notes.

Metal Building Components: ‘Rapid Gains’

Paint and coatings demand in the manufacturing markets is forecast to expand at a healthy pace through 2017.

"Rapid gains" are forecast for the metal building components segment, driven by the increased use of prefabricated metal building systems in nonresidential construction. The prefab systems are growing in popularity for their functionality and labor cost savings, Freedonia reports.

Furniture coatings will also account for a "sizable share" of new demand between 2012 and 2017, benefiting from gains in new housing completions, the study says.

The outlook for motor vehicle coatings will be brightened by improving economic conditions and rising consumer confidence, which will propel vehicle demand and, thus, production rates, the study says.

Slow Gains for Industrial Coatings

Maintenance and specialty coatings will see moderately slower gains and will remain the smallest market through 2017, Freedonia reports.

Growth in the marine coatings segment will stem in part from the need to maintain large ships, tankers and cruise liners.

“Demand in the industrial maintenance sector will be supported by expanding non-residential improvement and repair activity, while growth in the marine coatings segment will stem from greater output of marine equipment and the need to maintain large tankers, ships, and cruise liners, as well as offshore drilling rigs and platforms,” the study notes.

In the auto refinish sector, the “exceptionally high average age” of the country’s motor vehicle stock will offer opportunities for coatings growth; however, gains will be slowed somewhat by the trend toward fewer vehicle accidents and a higher percentage of those vehicles being totaled.

Freedonia’s report also includes profiles of 33 industry players, including PPG, Sherwin-Williams and Valspar.